In one of the most important decisions for a number of years before the Court of Appeal for those involved in letting sector, judges found in favour of landlords and letting agents in the case of Northwood Solihull v Fearn & Ors,

The ruling has serious implications for landlords, tenants and agents in England and Wales and possibly in recognition of this, explains why judgment was handed down yesterday just eight days after last week’s hearing.

The case began as a possession claim based on a section 8 notice served by the Solihull branch of lettings agency Northwood on behalf of the landlord on the ground of rent arrears.

The tenants, Mr Fearn and Ms Cooke, issued a counterclaim for damages for failure to provide valid prescribed deposit certificate.

Both the section 8 notice and the deposit certificate were signed by the landlord company but through the hand of a company director or a property manager.

The tenant’s case is that the only way for a company to sign these documents is in accordance with section 44 of the Companies Act 2006, which requires two authorised signatures by two directors or one director whose signature is witnessed.

The tenant’s proposed position, if right, would have been very troubling to landlords and agents as it would mean that every possession notice and certificate will have to be signed by at least one director and a witness. Inevitably, this would cause huge practical and logistical challenges to companies who operate multiple office locations, and the issues are even more obvious when one thinks of bigger agents and landlords with national operations who need to authenticate hundreds of these documents every day.

The landlord’s position was that the documents in question do not require the level of formality to which section 44 is intended to apply. The landlord’s case was that wider common law agency principles apply and that a properly authorised individual is fully capable of validly authenticating these documents on behalf of the landlord with their personal signature.

On first appeal, Mr Justice Saini found that the section 8 notice was valid and the prescribed information certificate was invalid. This second appeal at the Court of Appeal dealt with an appeal by the tenant against the validity of the section 8 notice and a cross-appeal by the landlord on the invalidity of the certificate.

The Court of Appeal’s decision 

High Court judges ruled that the deposit certificate could be signed by a person acting on behalf of the landlord. As the certificate was signed by the property manager who was authorised to sign these documents, the document was properly authenticated.

The section 8 notice was also capable of being served and signed by an agent on behalf of the landlord. The notice was signed by an authorised agent of Northwood Solihull (its director) and therefore complied with the relevant primary and secondary legislation.

The Court of Appeal judgment addressed a number of important legal principles of agency and company law. All of these principles have direct and immediate practical implications for the way landlords and agents operate their businesses on a day-to-date basis.

JMW’s David Smith and Neli Borisova who acted for the landlord will be presenting a webinar at 12pm tomorrow on the judgment where they will discuss in more detail the various legal principles and practical implications which follow.